SUCCESSION PLANNING
Tariro Sakala????????
Medical Assistant @ Minimally Invasive Gynaecology | International Trade and Diplomacy
A common misconception is that succession planning is only meant for family-owned businesses; however, the reality is that succession planning greatly contributes to establishing a competitive advantage and business continuity in the corporate world.
Succession planning safeguards the sustainability and smooth transition of leadership in an organisation. This is because a succession planning policy ensures an exit strategy, and a solid plan is prepared before the retirement of a leader or sudden withdrawal from an organisation (Ng’andu & Nyakora, 2017; cited in Chia et al., 2023). Succession planning involves the transfer of both ownership and control of the firm from one generation to the next (Kandade et al., 2020).
Succession planning focuses on ways to ensure job continuation if key individuals are unexpectedly away from work. It is a human resources instrument that addresses an organization's present requirements as well as potential future needs, mainly by safeguarding continuity for key positions in the organisation. The question at hand requires the determination of the accuracy of the provided assertion. This essay takes the stance of supporting the claim at hand by noting that some organizations also think properly and pay attention to succession planning, wherein those executives possessing the desired skills and potentials are systematically identified and efforts are made to develop the appropriate executives to hold the position in the future.
THE IMPORTANCE OF SUCCESSION PLANNING
A succession planning policy is crucial to a highly successful organization's survival and sustainability (Rothwell, 2010, 2015; Rothwell & Prescott, 2022). Succession planning is an essential part of doing business, no matter how certain the future of the company appears. Succession planning forces companies to consider the long term. Long-term planning is required for businesses that want to be successful in the long run. In the face of fast change, strategic plans are required to guide an organization's actions with a will to design a road to retirement for top leaders and guarantee their experience is transmitted to their successors with a clear succession plan. Succession planning is about taking into account the future of a firm.
There are two main reasons for succession planning. The first is continuity with prosperity. Entrepreneurs dedicate their lives to building their businesses, and it is one of their crowning achievements, so they frequently have an innate desire to see their businesses continue and prosper after they retire. As a result, they feel a commitment to their customers, clients, community, and even suppliers. Many businesses collapse when the initial founder retires, sells the business, or passes without an established succession plan.
The second reason is to avoid a shortage of qualified and informed employees. Larger enterprises must execute a succession plan throughout a broad portion of the company, from lower supervisory responsibilities to high-level managerial positions. This method is more conducive to discovering, developing, and retaining essential leaders.
SUCCESSION PLANNING IN ZIMBABWE
The majority of enterprises in Zimbabwe (80%) are family-owned and generally small to medium-sized, thriving under the leadership of the founding member (Nyoni, 2019). The SME sector has achieved a significant foothold in the Zimbabwean economy, employing 60% of the workforce and contributing an estimated 50% of the country's GDP, allowing appropriate authorities to pay attention to the sector (Government of Zimbabwe, 2015). In addition, in the face of diminishing foreign direct investment and a financial crisis in Zimbabwe, this sector continues to supplement large enterprises' output of goods and services. According to the FinScope MSME Survey (2012), 2.8 million business owners of various business kinds employed 2.9 million workers. The rapid expansion of these businesses necessitates the provision of a unique type of corporate governance Governance that is appropriate for family-owned enterprises. It is an important part of the Zimbabwean economy. The country's significant increase in family businesses can be attributed to the shift taking place in traditionally major firms, which have been shrinking and forcing the newly unemployed into the informal SME sector. Zimbabwe has its fair share of successful businesses that began as family businesses and grew over time to become massive corporations. For example, the Meikles family business empire is Zimbabwe's oldest, having grown to become a listed company on the Zimbabwe Stock Exchange. Econet Wireless Zimbabwe, Nyaradzo Funeral Services, Moonlight Funeral Services, and Peace Security Company are just a few examples of firms that began as family-run businesses. However, for the majority of family-owned businesses, longevity and sustainability are critical. This is why succession planning is important.
For senior positions of Chief Executive Officer, Chief Finance Officer, Chief Operating Officer, Chief Information Officer (C-suite) and other senior leadership roles, the Reserve Bank of Zimbabwe (RBZ) prescribes a certain set of person specifications required for such positions. More often than not, it has been observed that many banks fail to field a suitable person from within when an unplanned departure occurs and may have to scout for a key role successor externally. The RBZ carries out a periodic compliance audit on bank operations and succession planning is regarded as a key human resources compliance issue.
In Zimbabwe, succession planning studies have been carried out on family-owned businesses and Small to Medium Enterprises because most of these are owner-managed and in the event of the passing on of the owner, the business also goes into demise. In private succession planning has a higher chance of taking place than in state-owned enterprises. Schweppes and Old Mutual are examples of such companies that have a succession plan in place with full implementation with the help of their human resources departments. This has helped ensure the success of these organisations for the past years as well as their continued success.
J&J is also an example of a company in Zimbabwe that practices succession planning in their family-owned business. They practice job shadowing to ensure that the successor is fully knowledgeable and experienced enough to take over the family business when the time is right. This is a very popular practice in Zimbabwe’s white-owned family businesses, which brings about the idea that the idea of succession planning is more easily practised in white culture than in black culture. That, on its own, is an issue for further contention and analysis.
Zishiri farm in Beatrice is a tangible example that helps support the present claim provided in the question. The founder trained and mentored his daughter for the position to lead the business, and after his demise, she took over the business. The farm has thrived under her leadership and has even reached new heights in terms of produce and farm projects. Zishiri Farm is one of the leading producers and employers in the Beatrice area.
In contrast, however, there are poor succession planning measures in an area where they are most needed, which is in family-owned businesses. According to the 2021 Executive Succession Planning in Zimbabwe Survey Report, “ a total of 31% of participating organizations have a formal succession plan for their CEO. Only 39% of participating organizations have a formal succession plan for all Senior Executives. 76% of the participating organisations feel they have someone internally to take over if the CEO leaves at any time, whether there is a formal succession plan or not. 41% of the participants said their current CEO has been in that role for less than 5 years. Another 31% of the participants said their CEO has been in that role for more than 5 years but less than 10 years. Lastly, 28% of the participants said their current CEO has been in that role for more than 10 years”. This quoted passage indicates that succession planning is not highly practiced by Zimbabwean companies.
Sikomwe et al. (2012) noted that approximately 80% of the businesses in Zimbabwe are classified as family businesses and are mainly small to medium-sized. Family businesses are increasingly becoming the dominant form of business enterprise in Zimbabwe, where they play a pivotal role in the economic and social spheres. However, family businesses encounter many difficulties, succession planning being one of them. For example, Mulena and Chitanda supermarkets had chain supermarkets in Marondera and Chitungwiza but, due to poor succession planning when the founders died, their children failed to take over the business, and eventually, these businesses had to close down. This is an example of how simply pointing out a successor is not enough; rather, training and grooming for that position are a must as well. Succession planning goes beyond just identifying a successor; it is a process of training, grooming, and mentoring the successor so that they can take on the mantle with ease.
There is a lack of continuity within family business setups, and the cost of business failure in Zimbabwe has adversely affected social and economic growth. The high failure rate among first- and second-generation family businesses is attributable to the inability to manage ownership and succession. Failure to plan for succession is a recipe for failure to maintain business continuity. An article in the Herald of April 17 2012 stated that in Zimbabwe, succession planning is treated as a peripheral activity and business continuity is never considered a serious issue, thus there is no formal written succession plan in place. But most family businesses in Zimbabwe struggle to survive through to the second generation. This can be supported by how the commuter transport sector in Zimbabwe found out that business failure is caused by a failure to plan for succession. Examples of this include Mushandirapamwe and Tenda Buses. They were thriving during the era of their founders but as soon as power was transferred to the second generation, the buses went out of business and fell out of their thriving era.
Zimpost also provides an example of failed succession planning when they put in place a new general manager after the previous one had retired. The new manager lowered organisational performance, and a large number of employees quit because of his management skills, which affected the company very negatively.
领英推荐
Recommendations
From the above essay, the following recommendations were made;
To begin, family business owners should assist their children in developing an appreciation and understanding of the business while they are still young. The business owner should ensure that they have the best education and experience available. Thus, family business owners should educate their family members and employees on how to be entrepreneurial. In general, if a family firm is to survive generation after generation, organizational learning should be prioritized. This might be accomplished by encouraging the firm's employees to join official and informal networks from other firms, always putting in place formal processes to ensure the exchange of best practices throughout the various domains of activity, and always maintaining a database.
Secondly, there is a possibility the owner might fail to retire when he/she is due. The owners and leaders owe it to the employees to create a realistic and workable succession plan. The strengths and weaknesses of the successor must be identified, and the provision and development of skills are necessary. Leadership and management transfers are conscious acts of intentions.
Finally, for the succession plan to be successful, all parties involved must communicate rationally and objectively. There should be constant dialogue between the leaders and fellow employees.
Conclusion
There is a high rate of succession planning strategies in Zimbabwe; however, the problem lies in the failure to implement and plan functional succession plans. There is a high lack of proper training and preparation for successors for the role that they will be taking on which is why most businesses fail.
REFERENCES
Anzagira, Che & Badu, Edward & Owusu-Manu, De-Graft. (2022). perception of barriers to succession planning in family- owned construction firms in ghana. 58-72. 10.5281/zenodo.6992378.
Chia, Chi-Kuan & Razak, A.Z. & Ghavifekr, Simin. (2023). University Succession Planning: A Conceptual Review Of Models In Malaysian Context. 11. 1-20.
Chundu, Moses & Njobo, Julia & Kurebwa, Jeffrey. (2021). Sustainability of Family-Owned Businesses in the Willowvale Industrial Area of Harare, Zimbabwe. American Journal of Industrial and Business Management. 11. 461-480. 10.4236/ajibm.2021.115029.
Diya, V. R., & Mansor, M. (2019). Review of History Succession Planning: Replacement Planning, Talent Management and Workforce Planning. International Journal of Academic Research in Business and Social Sciences, 9(9), 1298–1303.
Munaza, B. Muhammad Abdullah, I. Ayesha, K. , Dr. Munazza, R. Sana, A. 2023. Succession Planning Practices In Sustainability Of Small Medium Enterprises: Overview Of Individual & Firm-Level Outcomes In Time Of COVID-19. Journal of Positive School Psychology https://journalppw.com. Vol. 7, No. 3, 262-274.
Nyoni, T. (2019). Factors affecting succession planning in Small and Medium Enterprises (SMEs) in Zimbabwe: a case study of Harare.